When renting makes sense

Sep 01, 1998 9:30 PM  By

As the holiday season fast approaches, names aren’t the only thing catalogers are planning to rent. Savvy mailers have found they can save money-and precious warehouse storage space-by renting rather than buying additional equipment to meet holiday demand.

Renting equipment provides the convenience of using reliable, modern equipment for a short time, often at a considerable savings over leasing or buying. “It’s really a cost-effective way of fulfilling orders during the holidays,” says catalog consultant Jack Schmid, who adds that a number of his clients have taken to renting equipment during the holidays.

These days, operations equipment rental comes in all forms, from a range of heavy-duty machinery such as sorters, forklifts, and trays in the warehouse, to computers and phone terminals used in the call center.

Take the case of $200 million-plus cataloger Omaha Steaks, which estimates saving nearly 30% last year by renting instead of buying seasonal operations gear. Omaha Steaks rents additional fax machines, pagers and building materials to construct temporary cubicles to house the more than 500 seasonal phone representatives it will employ during the holidays.

“The cost of renting is much cheaper in many cases than making a purchase,” says Laura Ramirez, facilities director for the Omaha, NE-based mailer. “Technology changes quickly, so we are guaranteed to have the most updated version of the needed equipment by renting every year. And renting saves on storage space.”

But it’s not only the large, high-volume catalogers that are renting. Many smaller, specialty mailers whose annual revenue is determined largely by the success of the holiday season also save by renting equipment.

“For the past two years, we’ve been renting computers” for the holidays, says Carol Dietz, president of $1 million plus toys mailer, This Country’s Toys. “We get up-to-date computers, which we use for three to four months,” she says. “We used to buy every time we needed more computers, but within a short time the machine is obsolete.” A two-year rental for a computer terminal, Dietz says, costs about $600, versus about $1,800 (including carrying and maintenance costs) to buy a computer.

Some mailers rent more than equipment, however. During the busy 10-week holiday period, David Viviani, owner of Sonoma, CA-based specialty foods cataloger Sonoma Cheese Factory, leases additional warehouse space-complete with a rented phone system, collapsible warehouse carts, and a giant 40-foot refrigerator to keep the increased supply of Sonoma Jack and other cheese-related products fresh. “We are only using the equipment for two months out of the year. The cost to own that equipment is prohibitive just to have it sit around collecting dust,” Viviani says.